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Limited liability 1 company

This article is about the U.S.-specific entity form. For limited liability in the , see . For a general discussion of entities with limited liability, see .

Corporate • Company • Business

Business entities

• • • Corporation •

European Union / EEA

• EEIG • SCE • SE • SPE

UK / Ireland / Commonwealth

• CIO • Community interest company • Limited company • by guarantee • by shares • Proprietary • Public •

United States

• • • LLC • Series LLC • LLLP • • corporation • • Massachusetts business trust • corporation Additional entities

• AB • AG • ANS • A/S • AS • GmbH • K.K. • N.V. • Oy • S.A. Limited liability company 2

• more Doctrines

• • • De facto corporation and corporation by estoppel • Internal affairs doctrine • Limited liability • Piercing the corporate veil • • Corporate

• United States • • United Kingdom • • • • • Vietnam Related areas

• Civil procedure •

• v • t [1] • e

A limited liability company (LLC) is a flexible form of enterprise that blends elements of partnership and corporate structures. An LLC is not a corporation; it is a legal form of company that provides limited liability to its owners in the vast majority of United States jurisdictions. LLCs do not need to be organized for profit. In certain US states, that provide requiring a state professional license, such as legal or medical services, may not be allowed to form an LLC but required to form a very similar entity called a Professional Limited Liability Company (PLLC).

Overview A Limited Liability Company (LLC) is a hybrid business entity having certain characteristics of both a corporation and a partnership or sole proprietorship (depending on how many owners there are). An LLC, although a business entity, is a type of unincorporated association and is not a corporation. The primary characteristic an LLC shares with a corporation is limited liability, and the primary characteristic it shares with a partnership is the availability of pass-through income taxation. It is often more flexible than a corporation, and it is well-suited for companies with a single owner. LLC members are subject to the same alter ego piercing theories as corporate . However, it is more difficult to pierce the LLC veil because LLCs do not have many formalities to maintain. So long as the LLC and the members do not commingle funds, it would be difficult to pierce this veil. Membership interests in LLCs and partnership interests are also afforded a significant level of protection through the charging order mechanism. The charging order limits the of a debtor-partner or a debtor-member to the debtor's share of distributions, without conferring on the creditor any voting or rights. Limited liability company members may, in certain circumstances, also incur a personal liability in cases where distributions to members render the LLC Limited liability company 3

insolvent.[2]

Flexibility and default rules The phrase "unless otherwise provided for in the operating agreement" (or its equivalent) is found throughout all existing LLC statutesWikipedia:Citation needed and is responsible for the flexibility the members of the LLC have in deciding how their LLC will be governed (provided it does not go outside legal bounds). State statutes typically provide automatic or "default" rules for how an LLC will be governed unless the operating agreement provides otherwise. Similarly, the phrase "unless otherwise provided for in the by laws" is also found in all corporation law statutesWikipedia:Citation needed but often refers only to a narrower range of matters. The limited liability company ("LLC") has grown to become one of the most prevalent business forms in the entire United States. All fifty states now allow for some form of the LLC business structure, after Wyoming passed enabling legislation in 1977. As the LLC's popularity has swelled, unforeseen issues have emerged in these new statutes, particularly around single-member LLCs, in Florida, New York, , Colorado, and Georgia, where personal asset protection has been subverted.[3] Effective August 1, 2013, the Delaware Limited Liability Company Act provides that the managers and controlling members of a limited liability company owe fiduciary duties of care and loyalty to the limited liability company and its members. Under the amendment (prompted by the Delaware Supreme Court's decision last November in Gatz Properties, LLC v. Auriga Capital Corp), parties to an LLC remain free to expand, restrict, or eliminate fiduciary duties in their LLC agreements (subject to the implied covenant of good faith and fair dealing).[4]

Income tax For U.S. federal income tax purposes, an LLC is treated by default as a pass-through entity. If there is only one member in the company, the LLC is treated as a “disregarded entity” for tax purposes, and an individual owner would report the LLC's income or loss on Schedule C of his or her individual tax return. Thus, income from the LLC is taxed at the individual tax rates. The default tax status for LLCs with multiple members is as a partnership, which is required to report income and loss on IRS Form 1065. Under partnership tax treatment, each member of the LLC, as is the case for all partners of a partnership, annually receives a Form K-1 reporting the member's distributive share of the LLC's income or loss that is then reported on the member's individual income tax return. On the other hand, income from is taxed twice, once at the corporate entity level and again when distributed to shareholders, thus more tax savings often results if a business formed as an LLC rather than a corporation.[5] An LLC with either single or multiple members may elect to be taxed as a corporation through the filing of IRS Form 8832. After electing status, an LLC may further elect to be treated as a regular C corporation (taxation of the entity's income prior to any or distributions to the members and then taxation of the dividends or distributions once received as income by the members) or as an S corporation (entity level income and loss passes through to the members). Some commentators have recommended an LLC taxed as a S-corporation as the best possible structure. It combines the simplicity and flexibility of an LLC with the tax benefits of an S-corporation (self- tax savings). Limited liability company 4

Advantages • Choice of tax regime. An LLC can elect to be taxed as a sole proprietor, partnership, S corporation or C corporation (as long as they would otherwise qualify for such tax treatment), providing for a great deal of flexibility. • A limited liability company with multiple members that elects to be taxed as partnership may specially allocate the members' distributive share of income, gain, loss, deduction, or credit via the company operating agreement on a basis other than the ownership percentage of each member so long as the rules contained in Treasury Regulation (26 CFR) 1.704-1 [6] are met. S corporations may not specially allocate profits, losses and other tax items under US tax law. • Limited liability, meaning that the owners of the LLC, called "members", are protected from some or all liability for acts and of the LLC depending on state shield laws. • Much less administrative paperwork and record keeping than a corporation. • Pass-through taxation (i.e., no double taxation), unless the LLC elects to be taxed as a C corporation. • Using default tax classification, profits are taxed personally at the member level, not at the LLC level. • LLCs in most states are treated as entities separate from their members. However, in some jurisdictions such as Connecticut, case law has determined that owners were not required to plead facts sufficient to pierce the corporate veil and LLC members can be personally liable for operation of the LLC (see, for example, the case of

Sturm v. Harb Development, 298 Conn. 124, 2 A.3d 859 (2010), http:/ / www. constructionrisk. com/ 2011/ 06/

principal-of-limited-liability-can-be-sued-without-need-to-pierce-corporate-veil/ ). • LLCs in some states can be set up with just one natural person involved. • Less risk to be "stolen" by fire-sale acquisitions (more protection against "hungry" investors). • For companies, each separate property can be owned by its own, individual LLC, thereby shielding not only the owners, but their other properties from cross-liability.

Disadvantages Although there is no statutory requirement for an operating agreement in most jurisdictions, members of a multiple member LLC who operate without one may run into problems. Unlike state laws regarding corporations, which are very well developed and provide for a variety of governance and protective provisions for the corporation and its shareholders, most states do not dictate detailed governance and protective provisions for the members of a limited liability company. Thus, in the absence of such statutory provisions, the members of an LLC must establish governance and protective provisions pursuant to an operating agreement or similar governing document. • It may be more difficult to raise financial capital for an LLC as investors may be more comfortable investing funds in the better-understood corporate form with a view toward an eventual IPO. One possible solution may be to form a new corporation and merge into it, dissolving the LLC and converting into a corporation. • Many jurisdictions, including , California, Kentucky, New York, Pennsylvania, , and , levy a franchise tax or capital values tax on LLCs. (Beginning in 2007, Texas has replaced its franchise tax with a "margin tax".) In essence, this franchise or business privilege tax is the fee the LLC pays the state for the benefit of limited liability. The franchise tax can be an amount based on revenue, an amount based on profits, or an amount based on the number of owners or the amount of capital employed in the state, or some combination of those factors, or simply a flat fee, as in Delaware. Effective in Texas for 2007 the franchise tax is replaced with the Texas Business Margin Tax. This is paid as: tax payable = revenues minus some expenses with an apportionment factor. In most states, however, the fee is nominal and only a handful charge a tax comparable to the tax imposed on corporations. In California, both foreign and domestic LLCs, corporations, and trusts, whether for-profit or non-profit - unless the entity is tax exempt, must at least pay a minimum income tax of $800 per year to the Franchise Tax Board; and no foreign LLC, corporation or trust may conduct business in California unless it is duly registered with the California Secretary of State. Limited liability company 5

• The District of Columbia considers LLCs to be taxable entities, thus eliminating the benefit of flow-through taxes by subjecting members to double taxation. Typically, LLCs will choose to be taxed as a partnership to avoid double taxation, which occurs in corporations. This allows companies to distribute their income among members who then report it on their personal tax returns. • Renewal fees may also be higher. Maryland, for example, charges a stock or nonstock corporation $120 for the initial charter, and $100 for an LLC. The fee for filing the annual report the following year is $300 for stock corporations and LLC, and zero for non-stock corporations. In addition, certain states, such as New York, impose a publication requirement upon formation of the LLC which requires that the members of the LLC publish a notice in newspapers in the geographic region that the LLC will be located that it is being formed. For LLCs located in major metropolitan areas (e.g., New York City), the cost of publication can be significant. • The management structure of an LLC may be unfamiliar to many. Unlike corporations, they are not required to have a or officers. (This could also be seen as an advantage to some.) • Taxing jurisdictions outside the US are likely to treat a US LLC as a corporation, regardless of its treatment for US tax purposes, for example if a US LLC does business outside the US or a resident of a foreign is a member of a US LLC.[7] • The principals of LLCs use many different titles—e.g., member, manager, managing member, managing director, chief executive officer, president, and partner. As such, it can be difficult to determine who actually has the authority to enter into a contract on the LLC's behalf.

Variations • A Professional Limited Liability Company (PLLC, P.L.L.C., or P.L.) is a limited liability company organized for the purpose of providing professional services. Usually, professions where the state requires a license to provide services, such as a doctor, chiropractor, lawyer, accountant, architect, landscape architect, or engineer, require the formation of a PLLC. However, some states, such as California, do not permit LLCs to engage in the practice of a licensed profession. Exact requirements of PLLCs vary from state to state. Typically, a PLLC's members must all be professionals practicing the same profession. In addition, the limitation of personal liability of members does not extend to professional malpractice claims. • A Series LLC is a special form of a Limited liability company that allows a single LLC to segregate its assets into separate series. For example, a series LLC that purchases separate pieces of real estate may put each in a separate series so if the lender forecloses on one piece of property, the others are not affected. • An L3C is a for-profit, social enterprise venture that has a stated goal of performing a socially beneficial purpose, not maximizing income. It is a hybrid structure that combines the legal and tax flexibility of a traditional LLC, the social benefits of a nonprofit , and the branding and market positioning advantages of a social enterprise.

International equivalents Companies with limited liability exist in business law worldwide. However, the limited liability company is a specific legal structure defined by the laws of U.S. states, with quite distinct characteristics. Many other countries have similar structures.

Argentina Although not an exact equivalent, the Argentine variant of the LLC is called Sociedad de Responsabilidad Limitada (S.R.L.) and it limits the liability of its members up to their capital contribution in the company. The equity is divided into equal stakes (can not be called "shares"), each one of which represents a percentage of the company and that can not be traded on the . Their by-laws are regulated by law N° 19550[8] and the commercial partnership is limited to a maximum of 50 partners. Limited liability company 6

Bosnia and Herzegovina Bosnian and Herzegovinian legislation, similarly to that in Croatia, contemplates LLCs as društvo s ograničenom odgovornošću (d.o.o.). Companies using this structure append the abbreviation d.o.o. to their company name. A or member in a d.o.o. is only personally liable up to the value of the member’s investment in the company.[9]

Brazil The corporate structure in Brazilian law most similar to the American LLC is the Sociedade Limitada (“Ltda.”), under the new Brazilian Civil Code of 2002. The sociedade limitada is the new name of the sociedade por quotas de responsabilidade limitada, and it can be organized as empresária or simples, under this new code, roughly corresponding to the form types of comercial (“commercial”) and civil (“non commercial”) of the Commercial Code. A new law in has made it legal to obtain an LLC by a sole-proprietor called Empresa Individual de Responsabilidade Limitada (Eireli for short). The main requirement is capital of 62.200,00 reais (US$35,250.00).

Bulgaria Bulgarian legislation contemplates LLCs as Дружество с ограничена отговорност (Druzhestvo s ogranichena otgovornost; Partnership with limited liability). Companies working under this structure append the abbreviation ООД (OOD) to their name. In case of an LLC with individual owner it is contemplated as Еднолично дружество с ограничена отговорност (Ednolichno druzhestvo s ogranichena otgovornost; One-man/ Single-member partnership with limited liability) and abbreviated as ЕООД (EOOD).[10]

Chile Chilean law contemplates a certain form of LLC known as "Sociedad de Responsabilidad Limitada" (Limited Liability Association). Also (LLC) These companies are regulated by law N° 3.918. Among their most important characteristics we can say that: • They can pursue a commercial or non-commercial purpose (Sociedad Comercial de Responsabilidad Limitada / Sociedad Civil de Responsabilidad Limitada). • They must be formed by two or more partners and can hold up to a maximum of fifty. • Their equity is divided into "cuotas" (not shares) each one of which represents a percentage of the company. • They can be managed by one or more managers (external if need be), or by a board of directors. • Their by-laws can't be modified, nor their partners be changed, without the consent of all the other partners. • In tax considerations, they differ from the LLC's because they pay a corporate tax for their income, amount that can be deducted by their owners as a credit against the taxes they pay. Chilean law also contemplates a very special kind of individual owner LLC called Empresa Individual de Responsabilidad Limitada (Limited Liability Individual Company), which uses the E.I.R.L. abbreviation.

Colombia Colombian legislation contemplates a very similar structure as mentioned above in the Chilean case. The Ltda. abbreviation is also used in Colombia.[11]

Croatia In Croatia, a private limited liability company is termed društvo s ograničenom odgovornošću (literal: limited liability company), abbreviated d.o.o.. A public limited liability company is termed a dioničko društvo (literal: joint stock company) abbreviated d.d.. Limited liability company 7

Czech Republic Czech legislation contemplates LLCs as společnost s ručením omezeným (s.r.o. or spol. s r.o.). An s.r.o. is not technically comparable to an LLC because the profits are still subject to double taxation. Czech law does not offer a possibility to start up a limited company without the possibility of avoiding double taxation.

Denmark The Danish form of the LLC is the (ApS). The minimum capital is required by law to be at least DKK 80,000 (approximately US$16,000) [Before 1 March 2010, DKK 125,000].

Dominican Republic Dominican Republic legislation contemplates LLCs as Sociedad de Responsabilidad Limitada, also known by their abbreviation S.R.L.;; S.R.L.s award limited liability to their members up to their contribution in the company (i.e., contribution of capital). This type of company began after the law number 479 of the year 2008.

Estonia In Estonia, a limited liability company is referred to as osaühing (OÜ). The type of entity is also required to be identified in the name. An OÜ is taxed as a corporation. The minimum capital required by law is €2,500

Finland Although not an exact equivalent, the Finnish version of the LLC is the Oy (osakeyhtiö) or in Swedish Ab (). An Oy is taxed as a corporation. The minimum capital required by law is €2,500.[12]

Germany Because of its hybrid characteristics it is very difficult to determine the German equivalent. On one hand it is possible to consider it as a kind of Gesellschaft mit beschränkter Haftung (GmbH) because it has aspects of a corporation; on the other hand it could be considered to be a kind of (KG), which is the German equivalent of a . Based on the literal translation of the word “company”, an LLC should be considered to be a kind of KG without any liable partner. For the purpose of taxation, the Bundesfinanzministerium (German Federal Ministry of Finance) gives detailed guidelines of the circumstances under which an LLC is to be considered to be a “corporation” or as a “limited partnership”.[13] It is useful to note, however, that the original LLC statutes of Wyoming and other US states were more or less explicitly modeled after the GmbH.

Hong Kong In the Limited Company is the most commonly incorporated type of company[14] and bears the characteristics of a Limited Liability Company. The core characteristics of a Hong Kong Limited Company include: i) it requires a minimum of one shareholder and one director (can be the same person), ii) a Hong Kong company requires a company secretary resident in HK, iii) foreign ownership is allowed, iv) company shareholders have limited liability and v) the company must have registered HK address. Entrepreneurs who register a company in Hong Kong can choose a Hong Kong offshore company. This company structure is basically a HK Limited Company but all business is conducted outside of Hong Kong. The advantage of this structure is that all business income that is sourced outside of Hong Kong is tax exempt. Limited liability company 8

Hungary Hungarian legislation contemplates LLCs as Korlátolt felelősségű társaság. Companies working under this structure append the abbreviation Kft. to their name. Hungarian LLCs were previously required to have a 3million HUF (Hungarian Forint) (approx. US$16,000) starting capital. This amount has been recently reduced and currently (in 2009) the minimum starting capital is 500k HUF (approx. 2.7k USD). The time of formation by the new electronic formation option has been reduced from 2 weeks to 2 hours, additional cost of formation is around 100k HUF (approx. 540 USD). Kft.s can be formed by the cooperation of lawyers. The Hungarian Kft. is the most common form of doing business in . As being part of the (EU), Hungarian Kft.s can now obtain an EU VAT registration number for doing business across the EU. The Hungarian EU-VAT reg.number starts with "HU". This way the existence of the subject company, VAT issues and the cross-check is available on the common EU website for companies.Wikipedia:Citation needed

Iceland According to Icelandic legislation, there are two types of LLC forms, private and public held limited liability forms. Private LLC is abbreviated "Ehf." The minimum capital of 500,000 Icelandic krónas (kr.). Public LLC is abbreviated "Hf." with minimum capital of 4,000,000 kr and goes to LLC.

India does not have a legal form which is comparable to a US Limited Liability Company i.e. being unincorporated while having limited liability. Commonly used business forms in India are - (a) Public and Private Limited Companies - Incorporated entities with limited liabilities. These are very similar to "Corporations" under U.S law. (b) Limited Liability (LLPs) - Incorporated entities with limited liability. The LLPs are organized as partnerships - they do not have a Board of Directors as such. The above entities are treated as taxable entities ("persons"), and as such are liable to tax on their incomes. These entities do not offer "pass-through" taxation benefits, unlike LLCs in the USA.

Italy The Italian Civil Code, approved in 1942 and as amended by the Government Act 6/2003 and furthers modifications, mainly provides three forms of limited liability company: • Società per azioni (S.p.A.): the minimum required starting capital for an SpA is €120,000. The capital is divided into shares (azioni) that can be transferred by endorsment or bought and sold on stock exchange. Only SpAs can be quoted in stock exchange market, issue corporate bonds and other financial instruments. SpA form and a higher capital are required by law to operate in protected businesses (i.e. banks, leasing companies, etc.) • Società a responsabilità limitata (Srl). The minimum required starting capital for an Srl is €10,000. Its capital is divided into stakes (quote) which can be bought or sold just by notarial act. SRLs can issue corporate bonds but are subject to many limitations. Similar to SRL is Società Cooperativa a Responsabilità Limitata (Scarl) whose scope is not making profit but give benefits to stakes' holders. • Società in accomandita per azioni (Sapa). The minimum required starting capital for a Sapa is €120,000 divided into shares. Sapas have a mixed liability scheme, where standard shareholders have limited liability while managing shareholders have full liability. Except this, SAPAs are exactly like SPAs even if uncommon. Companies append the corresponding abbreviation to their company names. Limited liability company 9

Japan Japan passed legislation in 2006 creating a new type of business organization, godo kaisha (J-LLC), a close variant of the American LLC.Wikipedia:Citation needed Japanese Tax authority does not consider J-LLC (Godo-Kaisha) a pass-through entity, but as a taxable entity.

Latvia In Latvia, a limited liability company is referred to as Sabiedrība ar Ierobežotu Atbildību. Abbreviation SIA is usually added before the company name. SIAs are recorded in a public register called Register of Enterprises (UR). The minimum required for SIA is EUR 2,800.

Macedonia, Republic of Macedonian legislation contemplates LLCs as Друштво со ограничена одговорност (Drushtvo so ogranichena odgovornost). Companies working under this structure append the abbreviation д.о.о. (d.o.o.) to their name. The minimum required starting capital for a d.o.o. is €5,000.

Mexico Mexican legislation contemplates LLCs as Sociedades de Responsabilidad Limitada, also known for their abbreviation "S. de R.L.". S. de R.L.'s award limited liability to its members up to their contribution in the company (i.e., contribution of capital) and also act as pass-through or flow-through entities whereby profits are "passed-through" to its members, avoiding double taxation. This type of company is widely used by foreign investors in Mexico because of its "pass-through" modality and its "check the box" capability under the IRC ( of the U.S.).Wikipedia:Citation needed

Moldova Moldovan legislation contemplates LLCs as Societate cu Răspundere Limitată, abbreviated "S.R.L.", and are regulated member(s)-founder(s), and other non-founder members, minimum one member-founder and maximum total of 50 members, at least one of them must be the founder of the company, but all of the 50 could be also founders.Wikipedia:Citation needed

Netherlands In the Netherlands, the is similar to an LLC. Its name always ends with the letters B.V. Effective October 1, 2012 the minimum capital requirement of € 18.000 has been abolished, so that a € 0,01 B.V. is now possible. The civil code allows for different classes of shares. BVs are taxed on profits.

Norway In Norway, the closest to an LLC is an . However, this type of entity does not have an option to elect for pass-through taxation such as an LLC in e.g. the United States. This means that both the profits of the company and the dividends from the company are taxed. Its name always starts or ends with the abbreviation AS or ASA. Minimum capital of an AS is 30,000 NOK (from 1 January 2012).

Pakistan In , LLCs are known as private companies that end with Pvt. Ltd. They should have at least Rs. 100,000 as their minimum paid up capital. The Securities and Exchange Commission of Pakistan (SECP) has made it mandatory for all listed companies to file their documents, returns, accounts and applications through the commission's eServices online filing facility, earlier, Limited liability company 10

this requirement was only applicable to the companies, which had been incorporated through eServices online filing facility.[15]

Peru There is no direct equivalent of an LLC in Peru, but some similar corporate forms include: • Sociedad anónima cerrada (SAC), a corporation which must have at least two and not more than twenty shareholders; its shares may not be offered to the public and cannot be traded on the stock exchange. • Sociedad comercial de responsabilidad limitada (SRL), a commercial partnership divided in equal participations which may not be called "shares". It must have at least two and not more than twenty partners. • Sociedad civil de responsabilidad limitada (S civil de RL), a professional partnership of at least two and not more than thirty individuals, with co-owner participation in the form of capital, of professional contribution, or of any combination of both. • Empresa individual de responsabilidad limitada (EIRL), a legal entity with one single owner. The capital for any of the above entities is freely determined by its statutes. There is no minimum requirement except for entities with certain types of activities, mainly in the financial markets, and then irrespective of their type.[16]

Poland In , a limited liability company is referred to literally as “company with limited liability” (Spółka z ograniczoną odpowiedzialnością; legally abbreviated as Sp. z o.o.; informally abbreviated as Spółka zoo (like zoo) in speech). However Sp. z o.o. has a legal personality and is considered to be a “corporation". The minimum start capital is 5,000 PLN (since 2009; until then, 50,000 PLN).

Portugal In , LLCs are called "Sociedades de Responsabilidade Limitada", that is, "company of limited responsibility", usually abbreviated Lda.. They are tax subject, and company shares cannot be sold in a public market, since 2006 the transference of them is not required to be done in the presence of a civil law notary, except if the company owns buildings, in the same way other major properties have to be sold. Nonetheless, the responsibility of the partners is limited to the capital share they hold, and the minimum capital required by law for a Lda. of € 5000. (In 2006 the PS Government, lead by José Socrates, did reduce the minimum capital to € 1, but in 2011 the new PSD Government, led by Pedro Paços Coelho, reinstated the € 5000 minimum capital.) The capital is not required to be deposited at the time of the registration of the company, instead the share holders have until 31st December of the year the registry was made.Wikipedia:Citation needed

Romania recognizes the limited liability company since 1990 under the name of societate cu răspundere limitată (S.R.L.), in which the owners are personally liable for the company obligations within the limit of their contribution to social capital. The minimum start capital is 200 RON which currently amounts to less than €50.

Russia In Russia and certain other former Soviet countries, an entity with a somewhat similar structure is known as Общество с ограниченной ответственностью (lit., "company with limited liability"), usually abbreviated OOO, or in some CIS countries as OсOO.Wikipedia:Citation needed Although a Russian limited liability company shares the same name with an American LLC, it is different in many ways. Most importantly, a Russian LLC is not tax transparent: the company is taxed at the corporate level, and then, upon distribution of dividends, shareholders pay income tax (personal or corporate).Wikipedia:Citation needed Limited liability company 11

A limited liability company is the most popular form of legal undertaking in Russia for simple shareholding structures. The minimum capital required is 10,000 Russian rubles.

Serbia Serbian legislation contemplates LLCs as društvo sa ograničenom odgovornošću. Companies working under this structure append the abbreviation d.o.o. or DOO to their name same as in Croatia. As in the , a d.o.o. is not technically comparable to an LLC because the profits are still subject to double taxation. Wikipedia:Citation needed

Slovakia In , the law contemplates spoločnosť s ručením obmedzeným (abbreviation spol. s r. o. or s. r. o.) or as the rough equivalent of a limited liability company. It is very popular form of business organization due to ensurance of limited liability in exchange for a relatively small investment into the registered capital. From one to 50 associates can found it through a founding agreement with minimum registered capital of €5000, minimum €750 per person, in money or other property. (§ 105–153 of Act. No 513/1991 Coll. – Commercial Code as amended.)[17]

Slovenia Slovenian legislation contemplates LLCs as družba z omejeno odgovornostjo. Companies working under this structure append the abbreviation d. o. o. to their name. The minimum required starting capital for a d. o. o. is €7,500. Due to the high cost and complicated bookkeeping of a real corporation, this is a more widespread form.Wikipedia:Citation needed

Spain In , LLCs are called Sociedad de responsabilidad limitada (SRL), "company of limited responsibility", or sociedad limitada (SL), or "limited partnership". They are tax subject, and company shares cannot be sold in a public market, the transference of them having to be done compulsorily in the presence of a civil law notary, in the same way other major properties have to be sold. Nonetheless, the responsibility of the partners is limited to the capital share they hold, and the minimum capital required by law for a S.L. is at least €3,000.

Sweden has no equivalent of an LLC. The closest company form is the handelsbolag (lit.: " company"). The Swedish AB (aktiebolag; lit.: "share company"), like the handelsbolag, is a tax subject and is more similar to a US C Corporation than an LLC. The minimum capital required by law in an aktiebolag is SEK 50,000, although this may be in the form of assets as well as capital. It should be noted that the AB structure requires shareholders, a Board of Directors, and regular meetings of both, together with complete audited accounts once per year. Creation or purchase "off-the-shelf" of an AB is relatively cheap and tax effective, but of a created aktiebolag can be an expensive and time-consuming operation.[18] Creation of public limited liability companies, or aktiebolag, quoted on the stock exchange, requires a minimum capitalization of SEK 1,000,000, however the overall regulation of public companies in Sweden, especially regarding methods and taxes, is thorough and detailed. Limited liability company 12

Switzerland The Swiss Code of Obligations[19] provides for different kinds of companies with limited liability, the two most commonly used are: Swiss Limited Liability Company:[20][21] The terms for this kind of company used in the three official languages of the Swiss Confederation are as follows: In German Gesellschaft mit beschränkter Haftung (abbreviation: GmbH), in French Société à responsabilité limitée (abbreviation: S.à r.l. or SARL) and in Italian Società a Garanzia Limitata (abbreviation: SaGL). A Swiss LLC is similar to a LLC with respect to various matters, including the following: Members may also be natural persons, corporations, partnerships or other LLCs,[22] the liability of a member of a Swiss LLC to pay for the LLC's obligations is limited to its capital contribution,[23] a Swiss LLC may be either member-managed or manager-managed,[24] and, unless otherwise provided for in the operating agreement, the members’ right to control or manage a Swiss LLC is proportionate to their individual membership interest.[25] The membership interests in a Swiss LLC have to be registered[26] and, thus, they may only be issued in the name of a member but not to the bearer. Swiss Corporation[27] (in English common law context usually translated as company limited by shares): The terms for this kind of company used in the three official languages of the Swiss Confederation are as follows: In German (abbreviation: AG), in French Société Anonyme (abbreviation: SA) and in Italian Società Anonima (abbreviation: SA). A Swiss corporation is with respect to various matters different from a LLC (including a Swiss LLC): Most important is that a Swiss corporation may, neither by default nor by exercising any respective option provided by the Swiss law, be member-managed like a LLC, as the respective mandatory provisions of Swiss law provide that the board of directors has certain non-transferable duties.[28] Furthermore, the shares of a Swiss corporation may also be issued to the bearer (bearer shares)[29] and, thus, not only in the name of a holder (registered shares), which, however, applies to the membership interests in a Swiss LLC, which may only be registered.

Tajikistan In Tajikistan same as in Russia, an entity with a somewhat similar structure is known as "Ҷамъияти дорои масъулияти маҳдуд", abbreviated as "ҶДММ".

Ukraine This type of entity exists in this country since the 1990s. In Ukrainian, it is spelled "Товариство з обмеженою відповідальністю" (abbreviated – TОВ, TзОВ), in transliteration "Tovarystvo z Obmezhenoyu Vidpovidalnistyu," that is, "company with limited liability".Wikipedia:Citation needed

United Arab Emirates This type of entity exists in the U.A.E. states as a widely accepted way to do business and is referred as L.L.C.Wikipedia:Citation needed

United Kingdom The new form of limited liability partnership (LLP), created in 2000, is similar to a US LLC in being tax neutral: member partners are taxed at the partner level, but the LLP itself pays no tax. It is treated as a body corporate for all other purposes including VAT. Otherwise, all companies, including limited companies and US LLCs, are treated as bodies corporate subject to United Kingdom corporation tax if the profits of the entity belong to the entity and not to its members. Limited liability company 13

United States A Limited Liability Company (LLC) is a relatively new business structure authorized by state statute. The LLC is chiefly inspired by the GmbH ("Company with limited liability"), a type of business organization in Germany, and by the limitada, a type of business organization available in many Latin American countries. In the United States, the first limited liability company act appeared in Wyoming in 1977 as special interest legislation for an oil company.[30] In 1980, the issued a private letter ruling to an LLC formed under the Wyoming LLC Act, indicating that the IRS would treat the LLC as a partnership for federal tax purposes.[31] However, later that year, the IRS proposed regulations that would deny partnership classification to any business entity in which no member bore personal responsibility for the entity's liabilities.[32] In 1982, Florida adopted an LLC act modeled on Wyoming's LLC Act.[33] Due to uncertainty over the tax treatment of LLCs, no other states introduced LLC legislation until after 1988.[34] In 1988, the IRS issued a revenue ruling stating that it would treat a Wyoming-style LLC as a partnership for tax purposes.[35] By 1996, nearly every state had enacted an LLC statute.[36] The National Conference of Commissioners on Uniform State Laws adopted the Uniform Limited Liability Company Act in 1996 and revised it in 2006.[37] A potential disadvantage specific to the United States is that LLCs are not considered to be corporations for the purposes of federal civil procedure; they are instead treated as partnerships. This affects the applicability of diversity jurisdiction in cases involving LLCs, barring application of diversity jurisdiction when even one member of the LLC is a citizen of the same state as one of the opposing parties. Should one member of an LLC be a citizen of a state of which one of the opposing parties is a citizen, any case between the LLC and those parties must be heard in that state's courts; corporations enjoy a more complete legal personhood that only denies diversity jurisdiction when the opposing party is a citizen of the state in which the corporation is incorporated (most commonly Delaware for large corporations, which has a small population) or has its principal place of business. AOL was set up as a LLC during its ownership by Time Warner from 2001 to 2008. There is a similar setup for BMW's American , BMW of North America, LLC. Chrysler has been an LLC since restructuring during the auto bailout of 2009, with a majority stake held by Fiat S.p.A..

References

[1] http:/ / en. wikipedia. org/ w/ index. php?title=Template:Corporate_law& action=edit

[2] See Del. Limited Liability Company Act § 18-607(b) (http:/ / delcode. delaware. gov/ title6/ c018/ sc06/ index. shtml)

[3] http:/ / zamzowlaw. com/ articles/ michigan-llc-formation/

[4] http:/ / www. dlapiper. com/ global/ publications/ Detail. aspx?pub=8429& RSS=true

[5] Presti and Naegele (http:/ / www. prestinaegele. com/ faq-what-are-the-pros-and-cons-of-limited-liability-companies-llcs) FAQ: What are the pros and cons of limited liability companies (LLCs)?

[6] http:/ / www. gpo. gov/ fdsys/ pkg/ CFR-2010-title26-vol8/ pdf/ CFR-2010-title26-vol8-sec1-704-1. pdf

[7] For example, HMRC in the United Kingdom, see HMRC Tax Manuals, DT19853A (http:/ / www. hmrc. gov. uk/ manuals/ dtmanual/

DT19853A. htm)

[8] Ley de Sociedades Comerciales (Spanish) http:/ / www. cnv. gov. ar/ LeyesYReg/ Leyes/ 19550. htm

[9] [Types of Companies in BiH http:/ / fipa. gov. ba/ local_v2/ default. asp]

[10] Commerce Law of Bulgaria, English translation, Chapter 13, Section I, Article 116 (http:/ / www. fifoost. org/ bulgarien/ recht/ en/

commerce_law/ Commerce-Law. pdf) [11] Código de Comercio de Colombia, just like S.A..

[12] Limited Liability (English translation) http:/ / www. finlex. fi/ en/ laki/ kaannokset/ 2006/ en20060624. pdf

[13] Steuerliche Einordnung der nach dem Recht der Bundesstaaten der USA gegründeten Limited Liability Company (https:/ / usainc. de/ index.

php/ download_file/ 74/ 147/ ).

[14] Company type and name | English (http:/ / www. investhk. gov. hk/ setting-up-your-business/ company-name-and-structure. html). Investhk.gov.hk (2012-07-27). Retrieved on 2013-07-19.

[15] http:/ / www. irfanlaw. com/ blog/ company-annual-statutory-return-filing-karachi-pakistan/

[16] http:/ / www. sunarp. gob. pe/ Aten24h/ pdf/ Anexo02. pdf

[17] Zákon č. 513/1991 Zb. – Obchodný zákonník (http:/ / www. upv. sk/ swift_data/ source/ pdf/ legislativa/ suvisiace_pravne_predpisy/

pravo_91513. pdf) (in Slovak)

[18] Swedish Companies Registration Office about Aktiebolag http:/ / bolagsverket. se/ foretag/ aktiebolag/ Limited liability company 14

[19] official German text: http:/ / www. admin. ch/ ch/ d/ sr/ 220/ index3. html, official French text: http:/ / www. admin. ch/ ch/ f/ rs/ 220/

index3. html, official Italian text: http:/ / www. admin. ch/ ch/ i/ rs/ 220/ index3. html [20] Swiss Code of Obligations, articles 772ss [21] Unofficial translation of term pursuant to: Swiss Code of Obligations, Volume II, Company Law, Articles 552 – 964, English Translation of the Official Text, Swiss-American Chamber of Commerce, Zurich 1992 [22] Swiss Code of Obligations, article 722 paragraph 1 [23] Swiss Code of Obligations, article 802 [24] Swiss Code of Obligations, article 811 [25] Swiss Code of Obligations, article 808 paragraph 4 [26] Swiss Code of Obligations, article 790 [27] Swiss Code of Obligations, articles 620ss [28] Swiss Code of Obligations, article 716a [29] Swiss Code of Obligations, article 622 paragraph 1 [30] Keatinge et al.,"The Limited Liability Company: A Study of the Emerging Entity," 47 Business Lawyer 375, 383-384 (Feb. 1992) (citing Act of 4 March 1977, ch. 155, 1977 Wyo.Sess.Laws 512). [31] Priv. Ltr. Rul. 81-06-082, 1980 WL 137231 (18 Nov. 1980) [32] Prop. Treas. Reg. § 301.7701-2, 45 Fed. Reg. 75,709 (1980) [33] Fla.Stat.Ann. §§ 608.401–471 [34] Keatinge et al., "The Limited Liability Company: A Study of the Emerging Entity," 47 Bus. Law. 375, 383-384 (Feb. 1992) [35] Rev.Rul. 88-76, 1988-2 C.B. 360. [36] Larry E. Ribstein, A Critique of the Uniform Limited Liability Company Act, 25 Stetson Law Review 312, 322 (1995).

[37] Limited Liability Company (Revised) (http:/ / www. uniformlaws. org/ Act. aspx?title=Limited Liability Company (Revised)). Uniform Law Commission.

External links

• http:/ / www. expat. or. id/ business/ companyestablishment. html Article Sources and Contributors 15 Article Sources and Contributors

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